Business

Incubation hubs enhance business ideas

Stephen Timm

Every year thousands of people around the world die on the road when their vehicles crash into a traffic light or lamp pole.

Festus Mwangi, owner of EFEM safety systems, has a vision of sand-filled bags built into traffic lights to absorb the force of impact from cars that drive into them.(JIJI PRESS)

Now, imagine sand-filled bags built into traffic lights and street poles that absorb the force of impact from cars that drive into them.

The owner of EFEM safety systems, Festus Mwangi, believes it's possible. He recently secured R1.1-million in funding from the Industrial Development Corporation's Support Programme for Industrial Innovation (Spii) to build a prototype of his road safety product.

Mwangi, originally from Kenya, said he received valuable support and networking opportunities from his university, the Durban University of Technology.

He is one of 90 entrepreneurs being assisted by the incubator, which is funded by the Small Enterprise Development Agency (Seda) and is one of an increasing number of entrepreneurs across the country being assisted by university incubators.

Incubation hub creates space for intellectual grooming
Universities often make for ideal places to set up incubators as entrepreneurs students and business people can take advantage of the intellectual property generated by academics, while roping students in for little or nothing to work on new ventures.

On top of the open atmosphere, universities also help stimulate new ideas. Today a number of universities have incubators. These include the University of Pretoria (UP) and the Durban University of Technology.

Stellenbosch University will launch its own incubator on August 1, while the University of Cape Town (UCT) Graduate School of Business's Bertha Centre for Social Innovation and the V&A Waterfront plan to open a 1 500m2 innovation hub and incubator next year.

A Cape Town incubator called the Bandwidth Barn, with premises in Woodstock, has acquired space at UCT and the first projects from the university are expected to start in the next few months.

This month the technology website TechCentral revealed that Wits University, in partnership with a number of players, is setting up TechInBraam, an information and communications technology cluster situated in Braamfontein, and there are plans to also host an incubator.

Added to this, the University of Johannesburg's (UJ's) new innovation centre has plans to set up an incubator in conjunction with a reality TV show. The surge by universities to set up incubators seems to have come at the right time.

Encouraging universities and science councils
In May, Minister of Trade and Industry Rob Davies revealed in his budget vote speech that his department is committed to encourage universities and science councils to host incubators, and to develop hi-tech and high-growth sectors.

In September last year the department launched its Incubation Support Programme, which offers cost-sharing grants to organisations that set up incubators or incubation programmes.

By June 2013, 17 applications for grants had been approved according to the department. However, one constraint is that incubators have to have industry links to qualify to access the grant, as Anita Nel, chief executive of Stellenbosch University's tech transfer organisation Innovus, discovered when recently attempting to apply for the grant.

The university has made available 300m2 on a floor of a building which opens onto the central campus and Innovus is now searching for R12-million to revamp the building. Nel said spaces had filled up within no time after an invitation to apply had gone out on Facebook.

In total the incubator will have about eight offices for start-ups and 22 hot-seat places for students working on business ideas, which will be filled by the winners of a recent student ideas competition.

Nel said Innovus had also been forging relationships with local businesses, such as Johann Rupert's Remgro, and she hoped that start-ups based at the incubator would be able to attract angel funding from retired business executives who live in Stellenbosch.

She said the incubator would keep a check on its entrepreneurs by having them make a pitch to the incubator staff and entrepreneurs every two months to justify why they should remain in the incubator.

Incubator staff would also publish the waiting list of entrepreneurs, so that those in the incubator would be constantly aware of the need to perform well, she said.

Willem Clarke, chief executive of Resolution Circle, UJ's innovation centre, believes it's vital for universities to set up separate companies to manage their incubation. He points out that although universities are great places for learning and research, their structure can stifle innovation.

University incubators attract young entrepeneaurs
Resolution Circle, a wholly-owned company of UJ, was set up to help create work for graduates looking for in-service training with the centre sourcing technical work from industry for the graduates.

Since its launch in May last year, the centre has received over R300-million in funding from the National Skills Fund and now has space for 1 000 graduates.

One of the four start-up companies that the centre has launched in the last year is a reality TV production house.

Clarke said the plan is to set up a business accelerator where 10 entrepreneurs would be chosen at a time to take part in a four-month reality TV series.

He said he had already secured the television space but was still in talks with investors to fund the incubator space — which will form one floor of a new 12-floor building that the centre is in the process of buying.

Clarke said the plan was for the company to film the entrepreneurs in residence.

He said he had toured the world recently and visited a number of countries, including Singapore and the US, looking at incubation.

The key lesson in many of incubator's success he said was the ability to set up an ecosystem where funders, industry, business support and universities all worked together to foster entrepreneurship.

Nurturing the most promising business ideas
But the head of UP's business incubator, Alex Antonites, said UP is in the process of signing a memorandum of understanding with the Innovation Hub incubator, which will see the Tshwane-based incubator nurture the most promising business ideas to emerge from the university's incubator.

The idea is that the UP incubator, which was launched in 2008, would work with students for three months to craft their business ideas into feasible business cases or have business prototypes developed, before getting them to pitch to the Innovation Hub.

Meanwhile the department of trade and industry's deputy director-general for broadening participation, Sipho Zikode, said at the launch of the Centre for Entrepreneurship at the Ekurhuleni West College campus in Katlehong earlier this month that the department would partner with the college to set up an incubation programme.

Incubator managers were unable to point to why universities were now opening their own incubators, but the Intellectual Property Rights from Publicly Financed Research and Development Act, which came into effect in 2008, is likely to have had some effect, as has Davies's incubation drive.

The act requires universities to set up technology transfer offices to commercialise intellectual property and this appears to have stimulated universities to set up incubators.

University incubators could help the country develop more high-growth firms, which could in turn create thousands more jobs, while developing solutions to solve many of the country's problems.

This feature has been made possible by the Mail & Guardian's advertisers. Contents and photographs were sourced independently by the M&G's supplements editorial team

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